The amount of the lifetime learning credit is 20% of the first $10,000 of
qualified education expenses you paid for all eligible students. The maximum
amount of lifetime learning credit you can claim for 2012 is $2,000 (20% ×
$10,000). However, that amount may be reduced based on your MAGI. See
Effect of the Amount of Your Income on the Amount of Your Credit, later.

Bruce and Toni Harper are married and file a joint tax return. For 2012, their MAGI is $75,000. Toni is attending a local college (an eligible educational institution) to earn credits toward a degree in nursing. She already has a bachelor's degree in history and wants to become a nurse. In August 2012, Toni paid $5,000 of qualified education expenses for her fall 2012 semester. Bruce and Toni can claim a $1,000 (20% × $5,000) lifetime learning credit on their 2012 joint tax
return.

To help you figure your lifetime learning credit, the student should receive Form 1098-T. Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2013. An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. However, the amounts in boxes 1 and 2 of Form 1098-T might be different from what you paid. When figuring the credit, use only the amounts you paid or are deemed to have paid in 2012 for qualified education
expenses.

In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student.

The eligible educational institution may ask for a completed Form W-9S, or
similar statement to obtain the student's name, address, and taxpayer
identification number.

The amount of your lifetime learning credit is phased out (gradually reduced) if your MAGI is between $52,000 and $62,000 ($104,000 and $124,000 if you file a joint return). You cannot claim a lifetime learning credit if your MAGI is $62,000 or more ($124,000 or more if you file a joint return).

You are filing a joint return with a MAGI of $112,000. In 2012, you paid $6,600 of qualified education
expenses.

You figure the tentative lifetime learning credit (20% of the first $10,000 of qualified education expenses you paid for all eligible students). The result is a $1,320 (20% x $6,600) tentative
credit.

Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($1,320) by a fraction. The numerator of the fraction is $124,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator is $20,000, the range of incomes for the phaseout ($104,000 to $124,000). The result is the amount of your phased out (reduced) lifetime learning credit
($792).